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Zscaler (ZS) Gains But Lags Market: What You Should Know

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In the latest trading session, Zscaler (ZS) closed at $155.06, marking a +1.31% move from the previous day. This move lagged the S&P 500's daily gain of 1.42%. Meanwhile, the Dow gained 0.97%, and the Nasdaq, a tech-heavy index, lost 0.07%.

Prior to today's trading, shares of the cloud-based information security provider had gained 2.37% over the past month. This has lagged the Computer and Technology sector's gain of 6.64% and the S&P 500's gain of 6.69% in that time.

Wall Street will be looking for positivity from Zscaler as it approaches its next earnings report date. On that day, Zscaler is projected to report earnings of $0.20 per share, which would represent year-over-year growth of 42.86%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $305.64 million, up 55.09% from the year-ago period.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $0.65 per share and revenue of $1.08 billion. These results would represent year-over-year changes of +25% and +60.23%, respectively.

Investors should also note any recent changes to analyst estimates for Zscaler. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.38% higher. Zscaler is holding a Zacks Rank of #4 (Sell) right now.

Looking at its valuation, Zscaler is holding a Forward P/E ratio of 237.1. For comparison, its industry has an average Forward P/E of 21.51, which means Zscaler is trading at a premium to the group.

Investors should also note that ZS has a PEG ratio of 4.99 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ZS's industry had an average PEG ratio of 1.9 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 151, putting it in the bottom 41% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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